Planning Personal Finance  Assignment example
High school
Finance & Accounting
Pages 9 (2259 words)
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1. The base option for Kyle and Helen is the offer of £ 263,200 where the sale of their old house is simultaneous with the move to their new house.


800 Cash outflow towards mortgage and insurance for the 2 additional months is (400+50) x 2 = ? 900 This offer is effectively lower than the base option by ? 100 For the offer of ? 265,500 with a moving date of 4 months, Cash inflow from higher offer is (265,500 – 263,200) = ? 2,300 Cash outflow towards mortgage and insurance for the 3 additional months is (400+50) x 3 = ? 1,350. This offer is higher than the base option by ? 950 Kyle and Helen should therefore accept the offer of ? 265,500 with a moving date of 4 months. 2. From the data presented in the case study, Kyle is not a stock market investor and holding the shares for sentimental reasons runs the risk of the value of those shares continuing to lose value. Kyle received the shares at no cost and any price that he gets is to be regarded as a profit. The recent fall in price of the stock is only a notional or paper loss. If Kyle can do an analysis of the distillery industry and the position of the local distillery company, he may be able to draw some conclusions on whether the dip in price is temporary or part of a long term trend. He can also get advice from a stock broker. His target should, however, be to sell the shares immediately or as soon as possible. Kyle may be liable to pay capital gains tax on the sale value if the price at which he sells is higher than the market price of the shares on the date he inherited them. ...
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